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Old 08-10-2012
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Default do refunds subtract from your total sales according to paypal

So I am getting close to the 20k limit and have had the note asking for the tax id for a few weeks now and will be adding it soon but just wondering do refunds given to buyers subtract from the total sales they count or not? I had a buyer return a $600 item and refunded them so i was wondering if they subtract this(hopefully) thanks in advance!
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I have spoken to 3 PayPal reps this year about the subject of incoming PayPal payments.

EVERYTHING counts coming into your PayPal account, even if Grandma sends you a $10. gift for your birthday.

Refunds, fees, shipping, charge-backs etc, etc...nothing takes away the initial amount.
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Old 08-12-2012
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That's absolutely correct TGMT - it's turnover - not net amount
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How is the $20,000 calculated? Will it be calculated based on net or gross transaction earnings?

As required by IRC 6050W, the $20,000 will be calculated by looking at a seller’s gross payment volume for sales of goods or services. Gross amount means that any adjustments for credits, cash equivalents, discounts, fees, refunded amounts or any other amounts will not be netted out.

In addition, the reported amount will include any shipping and handling, sales tax or other fees which are included in payments you receive. We realize that these amounts may or may not be included in your taxable income, but we are required to report them. You should work with your tax advisor to determine how these items should be treated for tax purposes.
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Are personal payments that I receive counted in the total that will be reported to the IRS?

No. Personal payments that are not payments for the sale of goods or services will not be counted when determining if the IRS thresholds have been reached and will not be included on your Form 1099-K if you exceed the thresholds. However, all payments received for the sale of goods or services will be used to calculate the gross payment volume to be reported. PayPal monitors accounts to ensure that personal payments are not being used for sales of goods and services.
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